HKSAR v. CHEUNG KWOK HUNG

DCCC 923/2020

[2021] HKDC 1328

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 923 OF 2020

________________________

________________________

________________________

Reasons for Sentence

________________________

1.  The defendant has pleaded to three counts of fraud, contrary to section 16A of the Theft Ordinance, Cap 210.

2.  The particulars of Charge 1 are that between 11 January and 1 February 2016, the defendant with others unknown, by deceit, falsely representing to the victims of Charge 1, Mr Chan and Ms Leung, his wife, that OCBC Wing Hang Bank Limited had offered a pre-approved loan through the defendant’s employer, Chevalier International Asia Limited, that Mr Chan could obtain loans with low interest rates from the said bank if money was deposited with Chevalier.  The defendant with intent to defraud induced the said Chan and Leung to borrow money from another financial entity, Ever-long Finance Limited, from which they made a payment in the sum of HK$971,200, benefiting the defendant and others or in prejudice or a substantial risk of prejudice to the said Chan and Leung.

3.  The particulars of Charge 2 are similar in that the defendant and others unknown between 3 and 15 January 2016, by deceit, falsely represented to the victim of Charge 2, Mr Chan, that Wing Hang Bank had offered a pre-approved loan through the defendant’s employer, Chevalier, and that Chan could obtain loans with low interest rates from the said bank if Mr Chan settled part of his existing debts through Chevalier.  The defendant with intent to defraud induced Mr Chan to borrow money from Carina Finance Limited and pay a sum of HK$150,000, benefiting the defendant or others or in prejudice or a substantial risk of prejudice to the said Mr Chan.

4.  The particulars of Charge 3 are similar in that the defendant and others unknown between 11 and 26 January 2016, by deceit, namely, by falsely representing to the victim of Charge 3, Mr Lee, that he could obtain loans with low interest rates from a bank if he borrowed money from a specified financial institution and deposited that loan, HK$700,000, with Chevalier.  The defendant with intent to defraud induced Mr Lee to borrow money from H.K. Sources Finance Limited and make a payment of that amount which resulted in a benefit to the defendant or others or in prejudice or a substantial risk of prejudice to Mr Lee.

5.  The defendant admitted the Summary of Facts.  He preyed on victims that had debts or existing loans.  Those victims ultimately were defrauded by the defendant’s false representations and inducements.  In total, those victims suffered a loss of HK$1,821,200.

6.  Mr Chan of Charge 1 had a credit card debt of around HK$1 million dollars and a mortgage of HK$15 million.  On 11 January 2016, he was contacted by a Jerry Lee of Chevalier who told him that Chevalier was in partnership with a number of banks to offer loans with low interest rates. 

7.  Mr Chan went to the office of Chevalier and was met by the defendant who called himself Alex Lee.  The defendant falsely represented to Mr Chan that he could obtain a loan of HK$3 million with a repayment term of only HK$5,000 each month.

8.  The following day, Mr Chan was told by the defendant that a bank had pre-approved such a loan.  He had to sign a contract but he was in the mainland, so his wife would sign it on his behalf.

9.  On 27 January 2016, Ms Leung, his wife, met the defendant in his office and was shown an OCBC Wing Hang Bank letter, which was a false document, claiming to be a pre-approved loan agreement.  The defendant said that the victims had to have a savings of HK$1 million dollars before the loan could be granted or, alternatively, if they borrowed HK$1 million dollars from a subsidiary money lending institution of Chevalier, then that sum could be deposited with Chevalier and satisfy OCBC Wing Hang Bank.

10.  Days later, both the victims of Charge 1 took out a loan of HK$1 million dollars with Ever-long Finance Limited and received HK$971,200 after fees were deducted.  Ms Leung wrote a cheque for that amount as directed by the defendant.  The defendant said once money was deposited with Chevalier, then the pre-approved loan would be granted.

11.  However, after that cheque was honoured, the victims did not hear from the defendant or Chevalier again.  No money was ever returned by the defendant or anyone from Chevalier nor did they ever receive a loan from that said bank. 

12.  The victim of Charge 2, Mr Chan, was a teacher with an existing loan of $1.2 million and he had to repay about HK$33,000 each month.  In December 2015, he was contacted by a female representative of Chevalier who said Chevalier was in

partnership with a number of banks who would offer loans with low interest rates. At first, Mr Chan declined the offer but she called again and he agreed to meet her.

13.  He went to the offices of Chevalier on 4 January 2016 and met the defendant who called himself Eddy Chan.  The defendant said he would source a bank offering low interest rate loans. 

14.  On 12 January 2016, the defendant called Mr Chan and said Wing Hang Bank had pre-approved a loan of HK$1 million dollars which would be granted if Mr Chan settled part of his existing debts.  The defendant convinced Mr Chan to borrow HK$250,000 from Carina Finance Limited. 

15.  The defendant then claimed that he would settle Mr Chan’s existing debts with that loan and improve his TransUnion credit score much quicker and more efficiently than Mr Chan doing it himself.  Mr Chan believed him and took cash to the defendant’s Chevalier offices.  There, he calculated his debts were HK$150,000, so he gave the defendant that amount in cash. 

16.  After that, he could not locate the defendant nor did the defendant settle his debt on his behalf nor did such a pre-approved loan from Wing Hang Bank materialise. 

17.  The victim of Charge 3 was similarly defrauded. He had loans of about HK$3.7 million which he was repaying each month in the sum of HK$49,000.  He received a call from a Louis Chan from Chevalier who offered him bank loans with low interest rates.  On 15 January 2016, Mr Lee went to the office of Chevalier and met the defendant who called himself Alex Lee. The defendant asked this victim to provide his TransUnion credit report for assessment for him to source a bank loan with low interest rates. 

18.  On 21 January 2016, Mr Lee was told by Louis Chan of Chevalier that his TransUnion score was not high but he had options, which included Mr Lee taking out a loan with an institution specified by Chevalier and depositing in Chevalier HK$700,000 of that loan.  If Mr Lee complied, then Chevalier could use that money as security to obtain a bank loan with low interest rates. 

19.  As directed by the defendant, Mr Lee took out a HK$2 million loan with H.K. Sources Finance Limited to settle his debts and used HK$700,000 of it to deposit in Chevalier to facilitate a bank loan with low interest rates.  Mr Lee prepared a cashier order in that amount as directed by the defendant and it was cashed. 

20.  After that, he did not hear from the defendant or anyone from Chevalier.  He suffered a loss of that HK$700,000 and did not obtain any loan with low interest rates from any bank. 

21.  All the victims agree that had they known they could not ultimately borrow money from any bank through Chevalier, then they would not have given the defendant the money as instructed. 

Mitigation

22.  The defendant is now 47 years old and is not a man with a clear record.  He has 21 previous convictions from 11 court appearances.  His first conviction was in 1987 when at the age of 14 he was convicted of burglary.  His convictions range from offences of dishonesty, including burglary and robbery to drug offences and triad-related offences. 

23.  For these charges, the defendant was arrested by the police on 1 August 2016 and granted police bail.  In February 2017, he was temporarily released from that bail.  On 26 September 2020, he was rearrested and charged the following day. 

24.  The defendant married in 2019 and his wife is presently applying for the right of abode in Hong Kong.  At the time of his arrest, the defendant was living with his father. 

25.  I have heard full mitigation put forward on the defendant’s behalf by Mr Davies.  Mr Davies reiterates that the defendant pleaded guilty at the earliest opportunity and is remorseful.  In fact, his best mitigation is his plea of guilty. 

26.  I am told since his arrest for these offences, he has turned over a new leaf, been in full employment and become a married man.  He also reiterated that defendant was involved in these 3 fraud charges at around the same time, involving the same company, Chevalier, and using the same modus operandi.  He committed these offences over a relatively short period of time and submits that the sentences imposed should run concurrently.

27.  Mr Davies also reiterates that although he was an active participant in these frauds, he was not the recipient of those substantial sums of money, was not the mastermind and was effectively a foot soldier of this scheme.  It is submitted that although the defendant does have a significant number of previous convictions, his last conviction was in 2005 and that there was a period of over 10 years where he stayed out of trouble. When he was rearrested, he had been working for a substantial amount of time lastly as a manager of a Japanese restaurant in Sha Tin earning honest money. 

28.  I have received a letter of remorse from the defendant himself and letters from members of a Methodist church in Sha Tin. Defendant has recently become an active church member, been baptised and studying a course in religious studies.  These letters from fellow church members confirms his commitment to turning over a new leaf and his remorse. 

29.  It has been suggested that in light of his actions and those letters, he is unlikely to reoffend after he had served a term of imprisonment for these offences and at the same time because of his commitment to turn over a new leaf, the court is urged to treat him with some leniency.  

Reasons for Sentence

30.  The prosecution has referred me to several authorities relating to similar offences to assist me.  There are no guidelines for the offence of fraud but clearly it is a serious charge which will attract a term of imprisonment.

31.  Relevant factors include the scale of the fraud, the modus operandi, the loss suffered and the role played by the defendant. Frauds of this nature are heartless in that they target vulnerable, gullible and often cash-strapped victims.  The defendant has plunged these victims into further debt. 

32.  I have been referred to HKSAR v Tsoi Shu and Others, [2005] 1 HKC 51, where the fraud there was commonly known as loco London silver fraud.  A fraud was perpetuated on gullible investors and the Court of Appeal held that frauds which preyed on gullible victims attracted heavy and deterrent sentences, sentences of 4 years and above.  Obviously, sentences will depend on mitigating or aggravating factors such as the role and involvement of each individual fraudster, the duration of the fraud and the amount of loss suffered by victims. 

33.  I have taken into consideration authorities I have been referred to, mitigation put forward by Mr Davies, the facts of the case and the particulars of the fraud.  I accept the defendant does not appear to be the mastermind nor was the fraud he was involved in of a particularly long duration.  The losses suffered by the victims is obviously an important consideration. 

34.  I find an appropriate starting point to be one of 4 years’ imprisonment for each charge.  This reflects all relevant factors important to sentencing. 

35.  The defendant indicated his plea at the earliest opportunity and will benefit from a full one-third discount.  I accept Mr Davies’ submissions to consider concurrent sentences.  Therefore after that discount is applied to a starting point of 4 years’ imprisonment, the defendant is sentenced to 2 years and 8 months’ imprisonment for each charge, Charges 1, 2 and 3.  I order that all three sentences be served concurrently. 

36.  Accordingly, the defendant is sentenced to a total of 2 years and 8 months’ imprisonment.